lowell
Well-Known Member
Given Oracle stock is being utilized as loan collateral for Skydance's WarnerDiscovery pursuit, it's important to note banks are frustrated with how much debt Oracle is borrowing to fund their AI and data center buildout investments:
"Oracle’s $300 billion megadeal with OpenAI is testing the limits of Wall Street’s appetite for debt tied to America’s data-center boom.
Banks including JPMorgan Chase struggled for months to spread the risk of billions of dollars in loans they made to build data centers leased to Oracle in Texas and Wisconsin, people familiar with the matter said. Many financial institutions that would ordinarily buy those loans face restrictions on how much exposure they can have to a single counterparty, and the sheer size of these debt packages pushed them to the limit with Oracle.
As a result, bank balance sheets got clogged, constraining the financing prospects of future projects tied to Oracle and OpenAI.
For example, lenders balked at financing the expansion of a data-center complex in Abilene, Texas, if Oracle were the tenant, according to people familiar with the matter. That led the developer, Crusoe, to lease it to Microsoft instead.
Lenders grew more comfortable with Oracle-related projects after the company said it would raise all the money it needed for 2026 by issuing roughly $50 billion in stock and bonds. Oracle said in a post on X last week that each data center it is developing for OpenAI is moving forward on time.
But even after it raises that amount, Oracle still has additional cash funding needs of $100 billion or more for 2027 and the first half of 2028, according to Morgan Stanley credit analysts. “We’ve pondered how [Oracle’s] considerable funding needs over the next three years may test the depths of different fixed-income markets,” the analysts wrote in February.
Oracle, though, is in a comparatively weaker financial position than big tech rivals. It has a lower investment-grade credit rating, more debt and is burning cash. Much of its future revenue is tied to a money-losing startup that is facing growing competitive pressure. The cost of protecting Oracle’s bonds against a potential default via credit-default swaps roughly quadrupled between late September and late March, though it has fallen slightly since then.
That has made lenders nervous about putting too much money into projects tied to the company, whose shares have declined by over 30% in the past six months."
Speaking of that, while Skydance gets a 12% distribution fee from it, ‘Rush Hour 4’'s running into some production hiccups and its budget financing isn't solid, given turmoil from the U.S.'s regional war (which is interesting because Middle East's funding both Ellison's pursuit and this movie):
"‘Rush Hour 4’ now scrambling for September shoot: Speaking of Paramount, when I last checked in on Brett Ratner’s Rush Hour 4, the auteur was understandably beaming after President Trump nudged the Ellisons into giving the film a wide release, which triggered approval from rights-holder Warner Bros. and the independent financing that would make the film possible.
Alas, the planned shoot in China, Africa, and Saudi Arabia this spring or summer has been pushed to September at the earliest, per multiple sources, and it’s unclear if the planned $115 million to $120 million in production financing is solidly lined up.
Producers Arthur Sarkissian and Tarak Ben Ammar still do not have deals with stars Chris Tucker and Jackie Chan (initial offers of $8 million each were rejected, I’m told; both made around $20 million for Rush Hour 3 in 2007, with Tucker making more than Chan). And producers are so far not offering pay-or-play deals, which can be a sign that financing is not locked.
It got me wondering whether the turmoil in the Middle East, where Ben Ammar had raised money, might be endangering Ratner’s big post-Melania comeback, even as Paramount, which would be a passive distributor of Rush Hour 4 and collect a 12 percent distribution fee, says it has secured its $24 billion from funds in the region to buy Warner Discovery. Sarkissian and Ben Ammar both declined to comment."
